The Reserve Bank of India (“RBI”), on March 28, 2019, has issued a circular A.P. (DIR Series) Circular No. 27 (“Circular”), in relation to the  Foreign Exchange Management (Establishment in India of a Branch Office or a Liaison Office or a Project Office or any Other Place of Business) Regulations, 2016 (“Regulations”).

The extant Regulations required a prior approval of RBI, for opening of a branch office, liaison office, project office or any other place of business in India, where the principal business of the applicant falls in the defence, telecom, private security and information and broadcasting sector. The Regulations were reviewed and amended pursuant to a notification dated January 21, 2019 issued by RBI, which resulted in, inter alia, removal of the requirement of obtaining prior approval of RBI in case of a proposal for opening a project office relating to the defence sector, where the government approval or license/ permission by the concerned ministry/ regulator has already been granted.  

In furtherance of the aforesaid, the Circular sets out that no prior approval of RBI is required for opening of a branch office/ liaison office/ project office or any other place of business in India, where the principal business of the applicant falls in the defence/ telecom/ private security/ information and broadcasting sector, provided that the Government approval or license/ permission by the concerned ministry/ regulator has already been granted.  Further, any proposal for establishing a project office relating to defence sector shall not require a prior approval of the Government of India, if the said non-resident applicant has been awarded a contract by/ entered into an agreement with the Ministry of Defence or Service Headquarters or Defence Public Sector Undertakings.